Despite reports, American productivity strong

In a recent interview, President Obama seemed to suggest his policies would have created more jobs if businesses had stopped finding ways to be more productive with fewer workers.

donald lambro

In a recent interview, President Obama seemed to suggest his policies would have created more jobs if businesses had stopped finding ways to be more productive with fewer workers.

It sounded as if he was saying that if businesses were a lot less innovative and would just stop trying to produce more goods and services at a lower labor cost, we would employ a lot more people.

In an interview on the "Today" show, host Ann Curry noted that in a persistently high-unemployment economy, "businesses have spent just 2 percent more on hiring people while at the same time spending 26 percent more on equipment. So why ... have you been unable to convince businesses to hire more people?"

Here's what Obama said:

"Well, I don't think it's a matter of me being unable to convince them to hire more people. They're making decisions based on what they think will be good for their companies," adding that the economy was growing again, but not fast enough to bring the unemployment rate down to normal levels.

"The other thing that happened, though, and this goes to the point you were just making, is there are some structural issues with our economy where a lot of businesses have learned to become much more efficient with a lot fewer workers. You see it when you go to a bank and you use an ATM; you don't go to a bank teller. Or you go to the airport, and you're using a kiosk instead of checking in at the gate."

This caught the attention of Donald J. Boudreaux, a professor of economics at George Mason University, who wondered if Obama was saying that if businesses were a lot less efficient, and much more labor-intensive, a lot more people would have jobs.

"With respect, sir, you're complaining about the source of our prosperity: innovation and the increases it causes in worker productivity," Boudreaux said in an open letter to the president that appeared on the free-market economics Web site cafehayek.com.

"With no less justification — but with no more validity — any of your predecessors might have issued complaints similar to yours," going all the way back to the days of President Grant in the 1870s.

"Do you, President Obama, really wish to suggest that the innovations you blame for thwarting your fiscal policies are 'structural issues' that ought to be corrected?" he asked.

What Obama appeared to be complaining about is the ability of American industry and businesses to produce more, sell more and, yes, export more, while cutting their labor costs.

The greatest economic myth, perpetrated by labor unions, liberal economists, political demagogues and the network news media, is that America doesn't make much of anything anymore.

In fact, we make and sell more than ever before. Exports are at a record level. Our labor force, at least those who have full-time jobs, has grown dramatically in recent decades. The number of people employed in manufacturing has fallen, but manufacturers produce more than ever before, even with fewer workers, lowering their unit costs. We have many more industries and small businesses, though the pace of our economic growth has slowed dramatically under the policies of the Obama administration.

Agriculturally, we have seen a dramatic decline in the number of farms and farmers over the decades. But as a result of higher hybrid yields and more efficient farming methods, we produce, sell and ship more than any other country and feed the world.

In the 1990s, the entire U.S. economy's output, as measured in our gross domestic product, was about $12 trillion a year. Today, it's $15 trillion and climbing.

"Manufacturing in the United States isn't dead or even dying," an Associated Press business story reported shortly after Obama took office in 2009 in the midst of the Great Recession. "It's moving upscale, following the biggest profits and becoming more efficient, just like Henry Ford did when he invented the assembly line" that brought the Model T within the reach of the average American.

"The U.S. by far remains the world's leading manufacturer by value of goods produced. It hit a record $1.6 trillion in 2007 — nearly double the $811 billion in 1987," the news service reported.

"Americans make more 'stuff' than any other nation on Earth, and by a wide margin," the Boston Globe reported.

Many obstacles beset our economy right now, but American technological innovation, efficiency and productivity are not among them. They are this country's strength and the wellspring of future industries, jobs and economic growth.

Instead of preaching zero-sum, jobless economics and blaming job losses on innovations like computerized ticket kiosks, Obama should be praising U.S. inventiveness. And figuring out how we can accelerate it.

Instead, he told Ann Curry that he is trying to identify "where the jobs for the future are going to be ... How do we make sure that capital is flowing into those places with the greatest opportunity."

That's a scary thought. The last thing America needs right now is Obama's central planners in Washington picking the winners and losers in our economy and directing who gets investment capital and who doesn't.

The best thing the government can do right now is get out of the way.

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